Hard Money Lending SFH Documentation

2 Replies


I am planning to do my first hard money loan to an experience developer who is purchasing a house and plan to flip it in few months after renovation --- LTC and LTV are low with 20+ % equity from developer.

Since this is my first project -- I am more worried/anxious on how things will work and what to look out for if things don't go as per plan and I need to understand worst case scenario. 

Developer has forwarded me two documents which he says he had signed with other lenders.. 

(1) Deed of Trust

(2) Promissory note 

I am looking for guidence on

(1) if there any other document I should be signing with developer and 

(2) What are the key things I should be looking into this document. 


@Jignesh Shah

You could ask for a Deed in Lieu of Foreclosure (not sure what this is called in a Deed of Trust state, but this is where you escrow the Deed of Trust in case they default). Other than that, you could require a Confession of Judgment and a Draw Schedule.

You want to be named on the homeowner's insurance policy as well. You should also be requiring they obtain title insurance.

Lastly, you may want to check to see if you have to be licensed to originate this loan. 

Also you should take the documents he gave you to an attorney, just in case. Usually it's the Hard Money Lender supplying the documents.

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